Agenda item

A report of the Director of Finance was presented to inform Members how the Investment Advisors’ recommendations were being implemented and to provide details of the transactions undertaken to demonstrate the implementation of the Investment Advice recommendations and the Fund's valuation was included, as well as a report on the treasury management of the Fund's cash balances and the latest Forward Investment Programme.

The Fund continued to favour growth assets over protection assets. For the period under discussion, bonds were still not considered value for the Fund and the Fund had no investments in Bonds at this time.

The cash level at the end of December 2023 was 4.27%.

Investment in direct property where the property had a good covenant, yield and lease terms would continue.   There were no purchases or sales during the quarter.

Investment in Alternatives, such as infrastructure and private equity, offered the Fund diversification from equities and bonds. They came with additional risks of being illiquid, traditionally had costly management fees and investing capital could be a slow process. An amount of £49 million was invested in the quarter.

Unfortunately, owing to temporary resourcing issues and conflicting work pressures the team had not been able to provide the usual transaction report for quarter ending 31 December 2023 in time for this Committee meeting.  The June 2024 Committee would be provided with a transaction report covering the six months to 31 March 2024.

As at 31 December 2023, the Fund had £221 million invested with approved counterparties. This was an increase of £32 million over the last quarter. The graph at Appendix A to the submitted report showed the maturity profile of cash invested as well as the average rate of interest obtained on the investments for each time period.

The Fund Valuation detailed all the investments of the Fund as at 31 December 2023, and was prepared by the Fund's custodian, Northern Trust.  The total value of all investments, including cash, was £5,194 million. The detailed valuation was attached at Appendix B to the submitted report and was also available on the Fund’s website www.teespen.org.uk. This compared with the last reported valuation, as at 30 September 2023 of £5,100 million.

A summary analysis of the valuation showed the Fund’s percentage weightings in the various asset classes as at 31 December 2023 compared with the Fund’s customised benchmark.

As at 31 December 2023 the Fund’s equity weighting was 60.83% compared to 59.95% at the end of September 2023.  Redemptions of £75 million in total were made from the Border to Coast UK and Overseas Developed Market Equity Funds.

A summary of equity returns for the quarter 1 October 2023-31 December 2023 were shown at paragraph 8.4 of the submitted report.

The Fund had no investments in bonds at this time. The Committee had discussed investing in bonds.  Although there was no directive to invest at this time, the Advisers had since indicated the levels at which they felt investment would be appropriate.  Officers were monitoring the situation and further discussion with the advisers would take place when the levels at which investment was felt to be appropriate came into range. Current thinking was that an investment via the Border to Coast Sterling Index Linked Bond Fund would be the most appropriate vehicle.

As at 30 November 2023 total commitments to private equity, infrastructure, other alternatives and other debt were £1.927 billion and details were provided at paragraph 8.8 of the submitted report.

ORDERED that the information provided was received and noted.